Jared, a fiscal year taxpayer with a August 31st year-end, owns an office building (adjusted basis of $800,000) that was destroyed by fire on December 24, 2018. If the insurance settlement was $950,000 (received March 1, 2019), what is the latest date that Jared can replace the office building in order to qualify for § 1033 nonrecognition of gain?
A) December 31, 2018.
B) August 31, 2019.
C) December 31, 2020.
D) August 31, 2021.
E) None of the above.

Question

Quizplus · Accepted Answer

Under § 1033, a taxpayer has two years from the end of the tax year in which the gain is realized to replace the property. Since Jared's fiscal year ends on August 31, 2019, he has until August 31, 2021, to replace the office building.

Jared, a Fiscal Year Taxpayer with a August 31st Year-End